Mercedes Is Making Serious Bank Right Now

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Pandemic or no, passenger car sales are recovering nicely.

Even with the economic fallout of a global pandemic, Mercedes-Benz is sitting pretty after the third quarter.

Mercedes' parent company, Daimler, just reported its earnings for Q3 2020, exceeding projections by some 43% with €3.07 billion before interest and tax, versus the €2.14 billion that was expected by a consensus from financial market data firm Refinitiv.

Part of the secret to its success, according to Reuters, might have been its decision to pull the plug on production of the Mercedes-Benz C-Class sedan at its plant in Tuscaloosa, Alabama, not to mention moves to consolidate its hydrogen fuel-cell development efforts with Volvo Trucks and put a pin in an automation development partnership with fellow German automotive giant BMW. The freed-up production capacity at Tuscaloosa will help Mercedes build a new EQ-branded electric crossover there.

2019-2020 Mercedes-AMG C43 Coupe Front Angle View Mercedes-Benz
2019-2020 Mercedes-AMG C43 Coupe Side View Mercedes-Benz
2019-2020 Mercedes-AMG C43 Coupe Rear Angle View Mercedes-Benz

More good news might lie ahead as Daimler moves into the fourth quarter, as the company expects its forward momentum to continue. Earlier this month, the company said it had launched an initiative to slash fixed costs, capital expenditures, and research and development spending by a total of more than 20% by 2025 as the company moves even further upmarket.

How can Mercedes possibly go even further upmarket? By reducing its focus on relatively high-volume products and pouring more of its attention into high-priced, high-margin utility vehicles and limousines, Reuters says. This could mean an expansion to the automaker's opulent Maybach brand sometime in the future.

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2020 Mercedes-Benz EQC Front Angle View Mercedes-Benz
Mercedes-Be
Mercedes-Benz

The news of Mercedes' surprise earnings performance comes as the European car market rebounds somewhat from its slump during the worst of the pandemic. New vehicle registrations were up slightly in September, Reuters reports, marking their first increase in 2020.

Daimler's earnings are a bit of a standout for how far they exceeded analysts' expectations, but industry-wide, the trend is largely the same, with automakers posting encouraging signs of recovery after production and sales were brought screeching to a halt earlier in the year.

Mercedes-Benz
Mercedes-Benz
Mercedes-Benz
Mercedes-Benz
Source Credits: Reuters

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